Intraday Report for January 17, 2012

Daily "Idealized Trades" Report

S&P 500 ETF: SPY

Corey Rosenbloom, CMT

Afraid to Trade

Intraday Report for January 17, 2012

Corey Rosenbloom, CMT

Afraid to Trade

Intraday Report for January 17, 2012

If youre like me, you cant wait until we get a breakout firmly above 1,300 (no traps!) or else a reversal lower that allows
for some short-selling on support breakdowns I really dont care which. Im just tired of this sideways, seemingly
manipulated/cheated creeper trend thats littered with dozens of busted sell signals that does create popped stops, but
doesnt get us definitively above the key 1,300 area. But we cant force our will on the market we must adapt to what
it gives us and right now, its still a battle between buyers/sellers at the all-important 1,300 level and today as is the
usual case, neither side won. The session tilts towards Bull Trap logic, so well see if that thought continues and is
confirmed with movement under 1,280/$128 but as long as were between $128/1,280 and $130/1,300, well keep
playing this intraday tug of war that weve been doing successfully for the last few weeks. Its not pretty, but it works.

1. ABC PRO-TREND DAY RETRACEMENT, 20 EMA, DOJI

If there ever were a perfect trade example/set-up, this is it. Remember, we always categorize our trades based on Type
of Day Structure developments in real-time, and the big opening gap and movement slightly above $130 gave us the
expectation that today COULD be a T3 or T2 Trend Day up. That thesis had us buying all pullbacks UNTIL price broke
under the 50 EMA (Trade #4). So, the first trade was your classic Trend Day buy into the rising 20 EMA with a reversal
candle a doji off of $129.60. The stop went under $129.50 and the grand target was a move to new session highs,
though as youre certainly aware, $130 is a very critical turning point and higher timeframe resistance/key levels often
serve as very good targets to play for intraday. That was the case here when price formed multiple reversal candles at a
wall of resistance into $130, exiting with a safety profit. DO NOT SHORT HERE, no matter how great it looked.

2. 20 EMA RETRACEMENT
Using the same logic, we look to buy the second pullback to the rising 20 EMA but the overriding factor in why this protrend day trade failed was due to the critical resistance at $130. One can play revisionist history and assume price would
have continued trending higher were it not for the very obvious $130/1,300 level. As such, this was a failed bullish trade
that stopped out tightly under the 20 EMA but even this WAS NOT A SHORT SALE TRADE.

3. 50 EMA REVERSAL CANDLES

Using identical logic, the 50 EMA (5-min) is the Line in the Sand that keeps us trading IN the direction of the developing
trend day, or else play a reversal trade (the ONLY allowed reversal/fade set-up on a developing Trend Day) on a break
under the level. The three reversal candles formed into $129.70 either at noon CST or 12:45pm CST, and like Trade #2,
the goal was to play protection on a safety exit when the upside breakout did NOT develop above $130. Price instead
stagnated from 12:00 to 1:13 before finally collapsing under the 50 EMA, triggering the only legal reversal trade.

4. 50 EMA BREAK, ROUNDED REVERSAL

On a developing Trend Day, the 50 EMA is the line in the sand, and when this level breaks, aggressive traders have the
highest probability of a successful reversal trade one with a very tight stop. This trade triggered on the impulsive
break under the $129.80 level complete with new TICK low as a confirmation and traded all the way back to the $129
support pivot where the exit was the bounce and trendline break above $129.20.

Corey Rosenbloom, CMT

Afraid to Trade

Intraday Report for January 17, 2012

Treating today as a Trend Day until proven otherwise at 1:30pm CST, up to 90 cents was possible today.

Corey Rosenbloom, CMT

Afraid to Trade

Intraday Report for January 17, 2012

As if your personal trading experience isnt enough to confirm that the market appears to be manipulated up
Algorithmic Market Manipulation Thesis the chart above highlights periods of day-over-day and week-over-week
impossible or non-stop rallies, ALL of which formed lengthy negative divergences in momentum and volume. And in
just about all cases, price continued higher, higher, higher than many people thought possible.
Let this be another reminder of how important it is to identify and adapt to the dominant narrative or thesis. In late
2010/early 2011, it was clearly the QE2 Inflation/Intervention Thesis that was tremendously successful yet the bigger
picture still remains that the market is manipulated/inflated up by Central Bank activities and that adapting to the
thesis (or price behavior) overrules ALL indicators and classical methods. Perversely, the market is driven up by the
bears/short-sellers who have NOT adapted to the new reality of inflated/manipulated markets.
And if you still cant come to terms with the term Market Manipulation, thats perfectly fine. Just think of it in terms of
Trend Following or Price Purism concepts (in all cases above, even with divergences, trading WITH the bullish/dominant
upward trend was better over time than trading against it, with the exception of the two Market Crashes that occurred
so conveniently after QE1 (early 2010) and QE2 (June 2011) ended). In fact, the only time the market seriously
reversed/retraced was directly after an intervention campaign (QE1 and QE2).

Corey Rosenbloom, CMT

Afraid to Trade

Intraday Report for January 17, 2012

Heres another reminder about how the Market Manipulation Thesis helped (or at least explained strange price
behavior) from January 2010. From December 2009, price was in a very similar choppy day-over-day rally as is the case
currently. Many bears were calling for an imminent top that just wouldnt reverse, and any bear that put their analysis
into work by short-selling the market was forced to buy-back the short positions at a loss over, and over, and over, and
over. The market peaked with a violent Bull Trap (potentially like today) on January 11, 2010 yet that was NOT the
reversal point of the market.
Buyers or They injected capital/manipulated the market higher (forcing short-squeezes/popped stops) TWO TIMES
in the monthly of January, which resulted both times in powerful T3 Trend Days to the UPSIDE because the market did
not crash as so many traders rightly so expected (or at least anticipated a reversal at some point).
When the market did crash, it was tremendously violent, falling from the 1,130 pivot support to 1,090 in a week giving
up all the gains during the prior creeper rallies and more.

Corey Rosenbloom, CMT

Afraid to Trade

Intraday Report for January 17, 2012

The dominant (or at least logical chart-based) thesis is that today formed a potential Bull Trap on the failure for price
to hold above $130 after the initial opening gap-through. This powerful reversal signal confirms under $128s support,
and todays violent sell-off into the close tips the chart odds towards that direction. BUT, if buyers rush in (buying
opportunity) off the session low new $129 (1,290), then look for a powerful breakout/popped stops opportunity to
develop above $130.25.
You can say it as simply or as fancy as you want it the current chart odds strongly suggest short-term trend reversal
from $130, but because odds are so strong and obvious, it means that further upside continuation (without a pause)
likely triggers a widespread capitulation from the short-sellers, triggering a massive upward impulse driven by popped
stops/short-squeeze.

Corey Rosenbloom, CMT

Afraid to Trade

Intraday Report for January 17, 2012

Theres really no point in spending hours and hours analyzing the current situation because its likely to make you
overwhelmingly bearish, and if so, then youll lose money (or miss an opportunity) to play a potentially huge breakout if
buyers manipulate/inflate the price back above $130/1,300. Yes, it really is as simple as that.
As traders, we assess the probabilities, try to anticipate what other groups of traders are thinking (majority opinion) and
of course how they are positioning (or where theyre likely to stop-out) and then prepare ourselves objectively for any
outcome. This way, we dont get upset when things dont go our way, or namely, how we THINK price should go its
not personal.
For a game-plan point of view for short-term trading, look to be long/bullish above $130 (risk of bull trap like today) or
else cautious/bearish beneath $130 with a trigger short (risk of market manipulation/stick-save) under $128.

Corey Rosenbloom, CMT

Afraid to Trade

Intraday Report for January 17, 2012

In all the grand possibilities of price behavior, the market is going to do one of two things:
Its either going to break powerfully/impulsively (popped stops) above 1,300 to target 1,375 and higher;
Its going to retrace here back to 1,240 or else reverse here back towards 1,200.
I suppose you could throw in a third variable which is it will stand still but eventually one of those two outcomes WILL
happen. Can you see 10 years from now the market at 1,300, stuck in a straight line on the monthly chart? That wont happen.

While we can spend lots of time trying to predict which of these two outcomes will occur, as traders, we need to be
equally prepared for either outcome so that we have the best chance to profit, and keep our stops tight in the event
another trap occurs (which would be a small move above 1,300 then an immediate reversal down). So to relieve stress,
plan your contingencies and how youll act and react depending on what ACTUALLY happens manipulated up or not.

Corey Rosenbloom, CMT

Afraid to Trade